The ITC found that the liquid biofuel industry, composed of ethanol and biodiesel producers, saw
remarkable growth in its business activities from 2004 to 2007, with the number of producers,
production establishments, and the value of corn ethanol shipments more than doubling and the
value of biodiesel shipments increasing by well over 2,000 percent during that time.

The bio-based chemical industry, composed of pharmaceutical and other chemical producers,
expanded as well during the period studied, though not as dramatically. Innovation is important
to the future competitiveness and productivity of both industries.

The ITC, an independent, nonpartisan, factfinding federal agency, completed the report at the
request of the U.S. Senate Committee on Finance. As requested, the ITC provided an in-depth
description of trends in bio-based activities within the chemical and liquid biofuel industries,
factors affecting their development and adoption of industrial biotechnology (IB), and
government policies related to these industries that have been implemented by the United States
and key competitor countries. Highlights of the report follow.

Cellulosic ethanol technologies have been an important focus of research and
development and investment in the liquid biofuels industry as firms seek to broaden both
the base of feedstocks and the range of biofuels. Research is more diverse in bio-based
chemicals but largely concentrates on the development of newer and more effective
enzymes, bio-based products, and production processes.

Of the products examined by the ITC, ethanol and biodiesel exhibited the most growth in
shipments, largely due to recent legislation by federal and state governments, but
pharmaceutical products accounted for the majority of IB sales. The chemical industry
uses innovative IB processes to produce a wide variety of bio-based products, ranging
from pharmaceuticals to biodegradable plastics. IB also allows for use of a diverse set of
inputs, including renewable resources such as corn and soybeans.

IB can benefit the U.S. economy by allowing the substitution of liquid biofuels for
conventional liquid fuels, potentially reducing crude petroleum imports; stimulating the
development of rural economies as a result of increased agricultural feedstock
consumption; and providing environmental benefits, including sustainable production,
reduced greenhouse gas emissions, and less waste generation. At the industry level, IB
can improve process efficiency as compared with conventional processes, resulting in
potential reductions in manufacturing costs and capital expenditures, and it can create
new products that can compete with conventional products.

Feedstock costs and availability and limited access to capital are significant impediments
to the successful development and adoption of IB by the U.S. liquid fuel and chemical
industries. A number of firms have decided not to pursue activities related to IB or to
abandon specific projects due to these kinds of impediments. Targeted U.S. and foreign
government support for the development and adoption of IB can assist in overcoming
some impediments. Such support is much more extensive for the liquid fuel industry than
for the chemical industry and is largely driven by concerns about energy costs and
security.

ITC general factfinding investigations, such as this one, cover matters related to tariffs or trade
and are generally conducted at the request of the U.S. Trade Representative, the Senate
Committee on Finance, or the House Committee on Ways and Means. The resulting reports
convey the Commission's objective findings and independent analyses on the subjects
investigated. The Commission makes no recommendations on policy or other matters in its
general factfinding reports. Upon completion of each investigation, the ITC submits its findings
and analyses to the requester. General factfinding investigation reports are subsequently released
to the public unless they are classified by the requester for national security reasons.